All posts tagged Mediobanca

Italy should move before Spain and apply for help from Europe’s financial-aid scheme hinged on the European Central Bank, according to the country’s premier merchant bank.

“The time has maybe arrived for Italy to apply for the OMT program,” Antonoio Guglielmi, head of Mediobanca’s acclaimed equity research team, said in a note this week.

OMT refers to Outright Monetary Transactions, which the ECB says it will use to buy potentially unlimited government bonds from euro-area members.

Mediobanca’s rationale? First of all it’s that “the market has already got the best it could hope for” from the announcement of the OMT plan, and “risks might be on the way up again.”

But more subtly it is the dispute over the planned European banking union which now looks to have legs (with disagreements over how so-called legacy assets should be treated at center stage.) Without their inclusion, “the overall rationale of the banking union would be undermined,” writes Mr. Guglielmi.

In other words, while Spain is expected to ask for help, the timing is less and less clear. And that’s why Italy should move now, as that should help. Italy decouple from Spain, according to Mediobanca.